MYANMAR OPENS FOR BUSINESS Maxis does not work in Myanmar. There was no signal so my phone was inaccessible for the two days that I was in Yangon as a guest of my Myanmar host who contacted MPI for information on master planned cities. In the absence of Maxis, I was able to only obtain Wifi emails from my phone where Wifi was available. However, some people tell me that Celcom subscribers can use their phones in Myanmar.
We suggested an immediate strategy of a Malaysian developer taking over an unused colonial building and turning it into a luxury boutique resort. And also a Malaysian developer building a green, international standard office tower of about 100,000 sq. ft. on land allocated by the Yangon authority for MNC’s to occupy with fully laid services of the highest standards to set the tone for the future image of Yangon. We were invited to submit proposals to the Myanmar Investment Corporation in June 2012.
There were a number of surprises on my first visit to Myanmar. In the capital city of Yangon, a number of people both at Immigration and at the Customs spoke English, so did the receptionists in the hotels, in the shops, and that included the cleaning lady in the hotel where we were staying.
As a frontier economy, Myanmar offers both promises and pitfalls for businesses wishing to explore the country. While the people have skills and while the country has rich resources, the population is extremely unaware of the opportunities available and almost all the funds and the opportunities lie in the urban cities.
We were told that despite the country being isolated for many years, the Government of Myanmar did not shut down the learning of English but kept private schools and colleges alive. The other surprise was that all the signboards in Yangon are in English and Burmese, so directions are quite easy. When I bought a set of maps of Myanmar from a street vendor, the maps were also in English and Burmese. So, certainly having been to Vietnam at the beginning of their business revolution to become a modern country, and being to Myanmar or Yangon, in particular at their beginning and seeing the level of understanding of English, there seems to be a greater opportunity for Myanmar to accelerate development and improve its economy since it already has some basic fundamentals of international communication.
The country is predominantly rural and infrastructure is of a very low standard. There needs to be major infrastructure changes for better highways and connectivity throughout the country including better quality highways linking the major cities surrounding Yangon and better utilities as well.
by: Kumar Tharmalingam Chief Executive Officer, Malaysia Property Incorporated
While we had the Earth Hour on 31st March every year where everybody was asked to shut off their power for one hour. In Myanmar and Yangon in particular, there is an earth hour every day. For the three days we were there, the power supply was erratic with frequent lapses in power especially at peak hours. One of the major issues in Myanmar is going to be the slow process of approvals and contracts. The basic fundamentals for the economy are therefore missing, and are only now slowly being opened.
The Yangon government wants to expose Yangon to the development strategy that Malaysia has employed over the last 30 years in becoming a developed economy and in particular they are impressed by the Petronas KLCC development. So the email to MPI was to brief the Chief Minister of Yangon on the opportunities available for design and development of a similar project. The knowledge and technology on projects and development is to be from Malaysia to be implemented in Yangon. We spent some time driving around the city and the Myanmar driver was apologizing for minor traffic jams because he said since last year the number of cars on the road street had increased tremendously. No new cars are allowed to be brought in but second hand cars are easily available. The cars looked new even though they had to be at least one year old. Most of the shops had people shopping in them and there were a couple of small shopping centers which were well patronized. Economically, Singapore, China, Vietnam and Japan has been major participants in Myanmar’s development over the last 15 years and like Ho Chi Minh in Vietnam you saw visible signs of the GLCs of Singapore, such as Keppel Land and CapitaLand’s projects in Myanmar. The next day was our meeting with the Chief Minister of Yangon. The Chief Minister’s office is in the old Parliament of Yangon since the new Parliament has moved to Naypyidaw, a 5 hour car drive to the north of Yangon. Surprisingly though a translator was present, the Chief Minister spoke excellent English to all of us and so our task to make a presentation on Malaysia’s success and how Malaysia was able to transform itself in the last 25 years into a modern and growing economy was easier. It also helped that our Prime Minister was visiting Myanmar at the same time, and though he did not visit Yangon, his visit was in all the national press and on TV. In the presentation, I stressed how the Private Sector and Government Linked Companies worked together to make Kuala Lumpur the modern city it is today. I further elaborated that Malaysia has strict regulations on property development and our Housing Development Act protects the consumer. Malaysians and foreigners are also able to own leasehold and freehold property in the country. Of particular interest to him was MPI’s proposal on how Yangon could develop a portion of 70 acres of land in between two railway stations into a major project just like KLCC or even Iskandar. While we briefed him on opportunities available for Myanmar, we also warned him of the fact that we did not think Myanmar had the economic capability to sustain such a project in the short term. He, in turn suggested that we let overseas investors come in to invest in the property. We had to explain to him that it was only possible if the entire project was done in stages. However, he wants to have a master plan that could be used as a showcase of Myanmar’s ability to rise up to become a modern city in a modern country and to give the citizens a future that they believe could be the new Myanmar. We promised to help.
They also need to overhaul the country’s decrepit telecommunication system where international delegates coming to Myanmar find that their telephones do not work. There are also re building the civil service to be the main driver of the development in the country. So what does Myanmar have? Myanmar has a population of 55 million, it has 5 borders with Bangladesh, India, China, Laos and Thailand. Its commercial capital Yangon, could be one of the region’s most strategic international ports in the future.
Above: Kumar with Yangon Chief Minister, U Myint Swe Below: A colonial building in Yangon
While the local economy expanded by 5.5% last year, it will probably grow by the same amount this year. The resources Myanmar has can be substantial. It produces more than 50% of the world’s jade and rubies and 60% of the world’s teak forests are in Myanmar. It is rich in minerals such as copper, has huge deposits of gas and oil. Gas is the biggest earner as most of it goes to Thailand and China. There is a construction of a huge gas pipeline from the Bay of Bengal to China’s Yunnan province and when it is completed, gas and oil exports to China are expected to surge. There are 17 local private banks and 11 banks have been approved to carry out foreign banking services. So while Myanmar has lots of challenges there is no doubt that the confidence that is in the country and the real estate values which have tripled in the last 15 months has a lot to do with the new confidence that people feel that they now own their country. I enquired about capital values in the city centre and I had a surprise that the average price in the city centre for development land is US$700 to US$800 per sq. ft. which is similar to KLCC’s land values. Unfortunately, the challenges of construction and the challenges of building design and planning and approvals are a major problem and could take time and lots of meetings. The opportunity by the government to use Aung San Suu Kyi as the best marketing asset for Myanmar cannot be denied. She remains the best ambassador for Myanmar in this present time. FDI will double this year, for e.g. from April last year to January this year, foreign investments came up to US$4 billion. And the reforms that are being proposed by the government include tax holiday periods. While we believe that Myanmar is a country with great potential, Malaysian developers wishing to enter into joint ventures or development potential in Myanmar should be comforted by the fact that they have the same time frame and the same learning curve as they had in China and Vietnam in the 1990s and in the early 2000. Preferably development by Malaysia into Myanmar should be on a G&G basis like how Singapore, China and Japan are doing. Myanmar is officially open for business. _________________________________________________________ This article was published on City & Country pullout from The Edge Malaysia dated May 28, 2012